Oplinger: The case for opposing the B.C. sales tax exemption

By Ken Oplinger, president and CEO of the Bellingham/Whatcom Chamber of Commerce & Industry

As a resident of Blaine, the husband of a Canadian, and the friend of dozens of people across the Lower Mainland, I could hardly be called, “anti-Canadian.”

That was until I weighed in on the sales tax exemption for B.C. residents. Based on some of the e-mails I received from our neighbors to the north, I was either a Canada-hater (which I am not), or an idiot (which is certainly debatable). Either way, they weren’t happy.

And who can blame them? On June 8, our Washington State Department of Revenue had some mid-level lackey issue an opinion (without any political oversight or consultation with affected communities), which was immediately picked up by the B.C. media. While news organizations helped whip our friends into a frenzy over the dreaded Harmonized Sales Tax (a tax which merged the previous 5 percent Provincial Sales Tax and 7 percent Government Sales Tax into a new 12 percent tax), this was dangled as a tempting carrot. A way to stick it to their Premier, and save the dreaded tax!

And once it was announced, it became, in the minds of many, no different than a “Charter Right” (sort of like our Bill of Rights), a gift to every British Columbian which could be revoked no more than one could revoke the right to breathe.

What I was faced with, then, was the considerable disdain of my wife’s countrymen (and especially my mother-in-law), versus the undeniable fiscal hits that local governments would take from this decision.

Those fiscal realities are substantial. The city of Bellingham alone, by my estimates, would lose $1.5 million in the first year, with close to $1 million of that coming in the current fiscal year. This would be on top of the three rounds of staffing cuts they have already made, and the $1.5 million projected shortfall already being looked at for this fiscal year.

Now, my Canadian friends argue that we’ll see a huge increase in traffic because so many people will want to come shop here. And an increase will certainly occur, but a sizeable one? From where? We had more than 750,000 people cross the line in May, and almost 1 million in June, each 200,000 more people than those same months in 2009. Border wait times on weekends are measured in the hours. Where exactly is this flood of new shoppers coming from?

And the kicker is that, in my assessment, while some retail businesses will certainly benefit from the increase, most Whatcom County businesses will actually be hurt by it.

How, you might ask? Simple. Local governments believe, and I’m staying out of the argument of whether I agree with them, but they do believe they have cut as much as they are able. Should this tax exemption go through, I predict that several, starting with the city of Bellingham, will look at increasing revenues in order to offset this hit in general fund resources. And when it comes to tax increases, who better than business to be first in line?!

So, some will benefit, all will be hurt, and in the end, I predict a relatively small increase in Canadian traffic.

But the absolutely best argument against this exemption is the simple one. Is it fair that we have to pay 12 percent on everything we buy up there, but they don’t have to pay 8.5 percent on everything they buy here?

And if that makes me Anti-Canadian, I’ll have to accept it.


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